End of mortgage term September and due to pay off help to buy…!

[BlueMumma2018]

Hi,

we bought our house in 2018 with help to buy putting in 5%. Our current mortgage deal is due to end in September and was at 0.25. Our repayments are £590. We have just come to the end of our interest free help to buy loan term also and due to pay it back otherwise start paying interest. We have been quoted the best deal we can get is around 6% also adding in paying off help to buy and our repayments will be just shy of £1400!!

I am so anxious about this as it means we are quite f*cked.

im just wondering if anyone can give advice on this. OH is set on doing this but I’m wondering if we would be better off leaving help to buy for another couple of years and suffer the interest on it because the internet is outrageous. If we were doing this at the same rate we were on it would only be £750 odd. I get it that we had record interest lows but to pay over double per month is a joke. It’s so disheartening..

I do agree

I got h2b in 2013
Put the house on the market 2018 and got out
I was lucky i had 30k equity after paying back the loan but like op our repayments were manageable around £550 back then and we over payed to make sure we had a buffer to get out and with sub 1% interest rates we were just smashing off capital

How old are you OP? Could you extend the term for the next 5 years while you see what the market does?

I looked at the scheme a long time ago.

My concern is that unless you have a significant increase in income or come into inheritance it was never affordable for many people who were given mortgages and approved for the scheme because there would ALWAYS come a point where repayments would step up significantly. This would obviously be compounded by a interest rate raise. And sub 2% rates were abnormal.

The idea was that equity increases would effectively offset this; the trouble is that equity gain across the country has always been uneven and not as big everywhere and price increases were unsustainable, when interest rates increase that when you see house price falls (just as htb people need to get out) but most of all - when I looked at the houses locally on the scheme they were over priced by about 20%. And they were overpriced even compared to other new builds. This meant that the amount the properties could gain in equity was limited from the off.

The scheme was massively flawed. I had discussions with the local parish council over why they shouldn't allow planning where these schemes were part of the process to make them 'affordable'.

I've been saying for years (including on MN) that they were a ticking time bomb for anyone unfortunate enough to buy one.

Over paying the mortgage with htb was essential - you had to do it to. If you didn't it would leave you particularly vulnerable.

Same boat. We took it out with every intention of overpaying mortgage to balance it out by end of 5 year period but then covid happened and I lost my job then cost of living crisis plus a new baby now mortgage rates have sky rocketed, the value of our house has risen so we owe even more and we have no fucking clue how to pay it back. We have 2 years left to try and figure it out

I cannot believe how many people are in this position, was this scenario never thought about? Interest rates were only going to go up. 6% is the long term average.

I feel for you, I really do but people were seriously duped with low rates and all this extra help to buy. What a shit show.

Yes help to buy was never a good idea unless people had a plan to pay back the loan at the end of the initial 5 years. Without that, you get stuck and interest rates were going to rise eventually. We didn’t go with it because we knew we wouldn’t be able to pay it back in time, we went for a smaller house that we didn’t need the help to buy to get.

Hi all, I am absolutely terrible with maths and figures.

So, go to see an Independent Financial Advisor (not expensive usually and a good one is worth their weight in gold) who can look at your situation fully, work out the best short and long term strategy for your situation, and find the best deal for you. (They often have access to FA-only deals that you can't find yourselves and if you aren't a whizz at maths and accounting, might not realise the best option anyway.)

I believe it adds 1% each year but I am not sure either of the cost, all I know is its cheaper to pay the interest than add the help to buy loan onto the mortgage.

I believe rates will start to fall in 2024/25 so our plan to wait until interest rates drop.